Jakarta –
The strengthening of the United States dollar (US) against the rupiah is predicted to be temporary. In fact, it is predicted that the US dollar will never touch IDR 16,000 from this year to 2024.
What is the reason?
“I don’t see any reason why the rupiah could be more than Rp. 16,000. Optimism is around 15,355 and ranging from 15,300 to 15,500 by the end of this year. Next year the direction is Rp. 15 thousand. We don’t see any direction for the rupiah to weaken further (against the dollar) next year,” said Joshua at the “Exclusive Media Afternoon Tea & The Launch of Permata Institute for Economic Research” agenda at the St Regis Hotel, Central Jakarta, Tuesday (7/11/2023).
Josua explained that the strengthening of the US dollar against the rupiah occurred due to two causes, market sentiment and fundamentals. Market sentiment factors include geopolitical issues such as Hamas-Israel and the tightening of the Fed’s higher for longer policy or global interest rates which remain at high levels for a longer period of time.
However, he said that the sentiment factor was essentially temporary and not prolonged. Simply put, said Joshua, the sentiment factor arises because of concern. The weakening of the rupiah against the dollar was due to sentiment alone.
“So because sentiment comes from FED interest rates and geopolitics, the sentiment factor will not last long. We see that fundamental factors are in control,” he explained.
Meanwhile, for fundamental factors, Joshua said that Indonesia has a strong fundamental position. He said that Indonesia’s inflation rate is still maintained at below 4% with predicted inflation at 2.89% at the end of 2023 and 3.17% at the end of 2024. This is still in line with Bank Indonesia’s target which ranges from 1.5% to 3. 5%.
Apart from that, Joshua explained that Indonesia’s debt rating is still high in a number of credit rating agencies or international debt rating agencies. This means that Indonesia’s ability to manage debt is still optimal.
In the eyes of investors, this is also a sign that Indonesia is a place that has good prospects for investing. According to him, there is no reason for investors to stop investing in Indonesia.
“America has had its debt rating downgraded due to debt management problems. Meanwhile, so far Indonesia’s debt management has been relatively well managed. The debt to GDP ratio has been relatively maintained at under 60%, even this year it is below 40%,” he explained.
In this way, Joshua also believes that Indonesia’s fundamental factors are still strong. In the midst of a good fundamental position, according to him, the rupiah currency could actually become stronger and more stable against the US dollar in the coming years.
“If investment is good, from the perspective of foreign investors why should they think more pessimistically? That is what causes us to say that the weakening of the rupiah is due to sentiment factors. This means that throughout next year, there is no strong reason for the rupiah to weaken further against the dollar due to fundamental factors,” he stressed.
Inaugurates New Research Institute
In this agenda, Joshua also announced that Permata Bank is now developing a new division. Permata Economic Research has now evolved into the Permata Institute for Economic Research (PIER). He explained that this institution was tasked with facilitating analysis and research on various economic trends and issues. Joshua said PIER was formed to help customers and the public to strengthen their financial decision-making process.
“The 2024 Economic Outlook that we released today is part of this effort,” concluded Joshua.
(hns/hns)
2023-11-07 15:21:51
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